Council tax changes push second homes onto holiday market

Rent campaigners are calling for councils to license holiday lets, warning they are driving families out of their communities.

Generation Rent is urging the Government to give councils powers to license and cap short-term holiday accommodation, claiming recent council tax changes are incentivising second-home owners to switch to holiday lets rather than returning properties to long-term residential use.

The campaign group says the rapid growth of Airbnb-style short-lets has “increasingly driven families out of their communities” as properties are repurposed for tourists, particularly in high-pressure coastal and urban areas.

Council tax reforms in 2025 allow local authorities to charge up to a 200% premium on second homes, whereas many holiday lets qualify for small business rate relief, which is often cheaper than council tax.

All an owner has to do to turn their property into a holiday let is to make it available for short-term letting for at least 140 nights and actually be let for 70 nights per year.

Tax advantages that make holiday lets more profitable for landlords than residential tenancies.”

Generation Rent says the changes reinforce “tax advantages that make holiday lets more profitable for landlords than residential tenancies.”

To give an idea of the scale of the problem, Generation Rent points to data that shows that in 2022, there were more than 330,000 holiday homes in England. That is around 7% of the private rented sector, and those numbers are still growing in popular coastal destinations in the South West of England and Norfolk, as well as in London, where housing pressures are already acute.

As a result, the group is calling for stronger licensing controls so councils can “strike a balance” between tourism and permanent housing supply.